Figures released this morning by Statistics Canada provided another sign the economy is moving along.
October GDP rose 0.3% in the month thus matching a similar-sized increase in September. Market expectations going into the report were for a slightly smaller monthly gain of 0.2%.
StatsCan said the strength in the month was relatively broadly based with output among goods-producing industries rising 0.4% while services output in total rose 0.3%. Within goods-producing sectors, the increase was more skewed to a sizable 1.3% jump in manufacturing output. Within manufacturing there were gains in a number of areas including chemicals, food and beverage, tobacco, transportation equipment and primary metal.
The agency also says the increase in manufacturing was tempered by declines in agriculture (0.4%) and utilities (0.1%). Mining output was flat in the month with a 0.8% drop in oil and gas extraction offset by a 1.0% gain in non-energy mining and a 3.0% surge in support activity (e.g. drilling and rigging services) for mining.
"Indications of stronger-than-expected growth," said experts at RBC Economics, "could argue for the Bank of Canada to re-introduce a tightening bias to its policy stance.
"However," the bank concludes, "recent data, including last week’s November CPI, continue to show inflation around the lower bound of the central bank’s target range of 1% to 3% that provides a strong counter argument to keep policy highly accommodative.
"Our forecast does assume that the maintenance of the stronger growth and attendant tightening in labour markets will eventually return inflation closer to the 2% mid-point of the target range."
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